How to Buy Your First Home in Australia (2026 Guide)

Buying your first home in Australia in 2026 is harder than it was a decade ago — but several federal and state schemes exist specifically to help. Here's how the process actually works.

Step 1: Know what you can afford

Before looking at properties, look at numbers:

• Borrowing power: Most lenders use ~28-30% of gross income for serviceability. Use a borrowing power calculator for an estimate.
• Stress test: APRA requires lenders to assess you at the contract rate +3%. So if you're approved at 6.2%, they're checking you can afford 9.2%.
• 20% deposit benchmark: $800k property = $160k deposit + ~$40k closing costs.

For most Australians, the deposit is the hardest part — not the monthly repayment.

Step 2: Understand the deposit options

Standard path: 20% deposit

• No LMI (Lenders Mortgage Insurance — typically $10k–$25k+)
• Best interest rates
• Hardest to save for in expensive markets

LMI path: 5–20% deposit

• You pay LMI premium (added to loan or paid upfront)
• LMI protects the LENDER, not you
• Can save you years of waiting, but adds $15k–$40k+ to total cost
• Sometimes worth it if property prices are rising fast

First Home Guarantee (FHBG) — federal scheme

• Lets eligible FHBs buy with just 5% deposit, NO LMI
• Government guarantees the 15% that would normally need to be your deposit
• 35,000 places per year (book early in financial year)
• Income caps: $125k single / $200k couple
• Property price caps vary by region (e.g. $900k Sydney, $700k Brisbane)

This is the single biggest leverage point for FHBs in 2026. If you qualify, FHBG can shift your timeline by 2–3 years.

Step 3: Check state-specific stamp duty concessions

Each state has different first home buyer stamp duty rules:

State	Full exemption up to	Concession up to
NSW	$800,000	$1,000,000
VIC	$600,000	$750,000
QLD	$700,000	$800,000
WA	$450,000	$600,000
SA	$700,000 (new builds)	—
TAS	50% off, up to $750k	—
ACT	Income-tested full exemption	—
NT	$650,000 (new builds)	—

On an $800k Sydney home as a FHB, NSW saves you ~$31,000 in stamp duty. That's larger than most deposits.

Use our Australian Stamp Duty Calculator to see your exact savings.

Step 4: Save the deposit (and stamp duty money)

A common mistake: budgeting just the deposit and forgetting closing costs.

Real cash needed at settlement for an $800,000 property:

• 20% deposit: $160,000
• Stamp duty (NSW FHB exempt to $800k): $0
• Conveyancing: $1,500–$3,000
• Building/pest inspection: $400–$700
• Loan establishment fee: $300–$800
• Mortgage broker (usually paid by lender): $0
• Total cash: $162,500–$164,500

For non-FHB scenarios, add full stamp duty: $32,000–$45,000 extra depending on state.

Step 5: Get pre-approved before you offer

Pre-approval (or "conditional approval"):

• Tells you what amount you can definitely borrow
• Signals to sellers/agents you're serious
• Speeds up your final approval after winning a property

Most pre-approvals last 3 months and are subject to property valuation. Renewing is free with the same lender.

Step 6: Use a mortgage broker (usually)

For first home buyers:

• Brokers compare 20+ lenders, banks compare only 1
• Service is free to you — they're paid by the lender
• They explain the trade-offs (offset account, fixed vs variable, etc.)
• They help with FHBG paperwork

About 75% of new mortgages in Australia now go through brokers. The downside is variable quality — get referrals.

Step 7: Choose loan features carefully

• Variable vs fixed: Variable lets you make extra repayments freely. Fixed locks in a rate for 1–5 years but usually caps extra repayments at $10k–$30k/year.
• Offset account: A savings account "offset" against your loan balance — interest is calculated on (loan balance − offset balance). Powerful for first-home-buyers with cash flow.
• Redraw: Similar to offset but money goes INTO the loan, so withdrawing it later is technically a "redraw".
• Fortnightly repayments: Pay half the monthly amount every 2 weeks → 26 half-payments = 13 monthly equivalents/year. Saves ~5 years off a 30-year loan with no change in cash flow.

Step 8: Settlement and beyond

The day of settlement:

• Your conveyancer transfers funds, you get the keys
• Stamp duty must be paid within 3 months (usually paid at settlement)
• You become liable for council rates, water, insurance

In your first year:

• Set up automatic mortgage payments
• Consider home + contents insurance (often required by lender)
• Update your address with bank, super fund, ATO, electoral roll
• File your first home buyer claim if you used FHBG / state concession

Common first home buyer mistakes

• Overstretching on borrowing: Just because the bank will lend it doesn't mean you should borrow it. Build buffer.
• Skipping the inspection: $500 inspection vs a $50,000 hidden defect. Always do it.
• Forgetting closing costs: Budget 1.5–3% on TOP of the deposit.
• Ignoring location for "more house": A 30-minute longer commute = ~250 hours/year. Calculate the real cost.
• Buying at the absolute top of your budget: Leaves zero room for rate rises, life changes, repairs.

The bottom line

Buying your first home in Australia is more achievable than headlines suggest if you use every concession you qualify for. Stack the FHBG (5% deposit + no LMI) with your state's stamp duty exemption, and you can buy in your 20s on a single income in most cities except inner Sydney/Melbourne.

Run the numbers on our Australian Mortgage Calculator with your specific situation, and on our Stamp Duty Calculator for your state.